Consumer confidence hit an all-time low in January of 56.3; the lowest reading since the index was started in 2002. The reading is down 41% from 95.3 one year ago. This trend of this index is usually a good leading read on where consumer spending is going. Consumer spending represents two-thirds of the U.S. economy, and is vital to holding the country back from a recession.
Consumers are being hit a by a combination of factors which are hitting their wallets and are causing wide-spread concern in households. These include:
- Increased fuel costs
- Increasing cost of food and necessities
- Dropping home values and increasing foreclosures
- Inability to get credit due to tightening market requirements
- Record Credit Card debt levels – The consumer is tapped out.
- Hiring stalling and unemployment rising.
- Lack of salary increases over the past 5 years that match inflation
With the press reflecting further bad financial news each day, it is little wonder that consumers are gloomy. The only question is “Will they hold back spending to the level that will trigger a recession?” An AP article today explores this in more detail - Consumer Confidence Sinks to Record Low